GST Council decides to take over GST Network

04 May 2018

The GST Council at its meeting today decided to acquire the entire 51 per cent of equity held by the non-government entities in GSTN amounting to Rs5.1 crore, to be shared equally by the centre and the state governments.

The GSTN Board will soon initiate the process for acquisition of equity held by the private Companies, a finance ministry release stated.
At present, the central and state governments hold 24.5 per cent stake each in GSTN. The balance 51 per cent equity is with non-government financial institutions like HDFC Bank, HDFC Ltd, ICICI Bank, NSE Strategic Investment Corp (10 per cent each) and LIC Housing Finance Ltd (11 per cent).
Majority of the GST processes, including registration, filing of returns, payment of taxes, processing of refunds are IT-driven and GSTN handles large-scale invoice level data of millions of business entities, including data related to exports and imports. Considering the nature of ‘state’ function performed by GSTN, the Council felt that GSTN be converted into be a fully owned government company.
The decision has also been prompted by a letter BJP leader Subramanian Swami wrote to Prime Minister Narendra Modi on 18 June 2017, in which he had demanded that the government nationalise GSTN and sack the GSTN chairman for what he termed as a “monumental fiasco” of being unable to activate GST by 1 July 2017. 
Earlier, in a letter to the prime minister in September 2016, Swamy had requested a stay on operations of GSTN due to 'foreign control' in its shareholding.
"...the GSTN, which is a data processing and tax revenue collection private limited company, which was never security cleared by the home ministry, whose clearance is mandatorily required. I strongly urge you to therefore to direct the complete stay of all operations of the presently constituted GSTN and that it remains nonoperational till it is reconstructed according to our national interest and after security certification by the home ministry," Swamy had stated in his letter.
The existing staff and their terms and conditions of employment will, however, continue for a period up to five years. However, the GST Board will have the flexibility of hiring people through contract on the terms and conditions similar to those used by GSTN till now while hiring regular employees.
The centre and states will continue to share the capital and O&M cost of the GSTN systems as per the existing financial commitments.
The Goods and Services Tax Network- Special Purpose Vehicle (GSTN-SPV) was created as a private limited, not-for-profit company under Section 25 of the Companies Act, 1956 (Section 8 of the Companies Act, 2013) on 28 March 2013 with an objective to provide shared IT infrastructure and services to central and state governments, taxpayers and other stakeholders for implementation of Goods and Services Tax (GST) in the country.